Building organisation resilience in the face of corona uncertainty

Videoconference meetings have become popular due to social distancing rules introduced to contain the Covid 19 pandemic. FILE PHOTO | NMG 

By NIGEL SMITH AND CHRISTOPHER RIUNGU

The Covid-19 pandemic’s disruptive effects, have sparked a wave of reactive responses by organisations unlike seen before. The uncertainty leading to changes in the
business environment and social behaviours has prompted varied responses that are likely to define organisational potential in the coming months and years.

Some organisations have moved to a ‘protect and survive’ process, taking aggressive financial precautions, closing strategic business units, potentially mismanaging their customers and workforce. While others are enduring and proactively planning, building resilience and testing future models — proverbially ‘building the plane while they are flying it’.

No one can exactly ascertain what tomorrow might look like. However, an organisation can prepare for the future by asking important basic questions that may yet offer an idea on how to calibrate its strategies and anticipate its role tomorrow.

Some of these questions include, why does the organisation exist? Where does it play? How can the organisation win, and how can it come out of this period in a stronger position? With deep internal reflection and clear direction as to how to forecast in these unprecedented times, these questions offer thoughts and ideas to business leaders and impact on ‘how to be a winner’.

Business planning further requires embedding resilience and agility. Various thought leaders have spoken at length on these areas. In 2019, 67 percent of 1,300 CEOs interviewed globally, including 50 from East Africa by KPMG, highlighted that agility and building resilience was the new currency of business.

Today if interviewed their response would probably be higher than 95 percent. Resilience was still a challenge for organisations in 2019 and it still is. It requires an enterprise view and a focus on practical steps that can be adopted across the organisation.

KPMG views three pillars of resilience that organisations can consider as financial, operational and commercial — each of these helping an organisation redefine the business and operating model.

Financial resilience is evidently one of the most important pillars and it includes thorough management of financial resources, taking adequate measures to protect liquidity, financial stress testing and rolling out contingency planning. Expectedly, finances are coming under immense pressure with the reduction in revenues and increased demand from suppliers whilst other cash obligations including operating expenses remain fixed.

To keep the organisation above water, a myriad of options and solutions are being employed depending on the cash and liquidity position, obligations and available financing options. At bare minimum, it is imperative for any organisation to embrace rapid planning, agile forecasting and stress testing.

Operational pressures are already defining tough choices for leaders to determine which product, services and processes should be kept operational and which should be discarded. Some cases will also regrettably involve decisions as to which employees, customers and suppliers to retain.

This is a time for an organisation to exercise sobriety and revisit what the purpose of the business is and to flex as much resources available to protect this goal. This is the time to refocus on cash generation and profitable business rather than chase top-line growth.

For the customer and workforce, effective communication is playing a vital role in establishing trust and loyalty during the uncertainty we currently are all living in. Digital reinvention is beginning to take a prime position to facilitate workforce productivity and customer experience.

In this digital rush, organisation should take caution of inherent risks in the digital space and have governance measures in place to mitigate them. Irrespective of the concerns, there is an opportunity to streamline the operating model, accelerate digital transformation and test new service delivery models.

Commercial resilience aims at tackling the result of the changes in the market and customer behaviour.

How an organisation responds is underpinned by a clear understanding of its business and its offering in order to implement rationalisation and shift measures depending on the demand metrics and current capabilities. Above all, ensuring seamless customer experience with the changing service delivery models.

Improving the customer experience during this time will build loyalty and those efforts go beyond the frequent headline emails that begin with “I hope you are managing well in these unprecedented times”. It goes further to showing empathy to their challenges, personal and business, seeking to listen, ask, ask some more and engage to increase trust.

This ‘new normal’ will likely draw out three types of organisations. The first, will be those that will harness new opportunities by calibrating their strategies with more resilient business and operating models that are shaped for the future.

The second type will be those that will barely weather this event and they will have a longer period adapting to the new reality and catching up to the requirements of the new world. Lastly, some may never recover.

Smith is an Associate Director and the Head of Debt Advisory and Restructuring while Riungu is a Senior Strategy Advisor in Strategy and Deal Advisory with KPMG Advisory Services Limited.